Iata warning over oil prices and Middle East tension

Sep 4th 2013, 08:00

Another month of “solid” growth in air travel demand in July could be thrown off course by rising oil prices and the threat of military action against Syria.

Carryings rose by 5%, down from the 6.1% seen in June, reflecting what the association described as a market correction in line with prevailing economic conditions as well as the impact of reduced travel in markets during Ramadan.

Iata director general and chief executive Tony Tyler said: “Passenger demand continues to be strong. But the story of emerging markets driving growth as developed economies stagnate could be shifting.

“We are still expecting growth of 5% this year. How that growth is achieved, however, appears to be at a turning point.

“The emergence of the eurozone from an 18-month recession provided the biggest boost to traffic over recent months.

“In contrast, the deceleration of the Chinese economy has been a dampener on air travel, with weakness showing up throughout emerging Asian markets.”

He warned: “The price of oil, a huge cost item for airlines, is tracking political tensions in the Middle East. Along with the global cost impact of this, at the regional level there is the potential for disruption for one of aviation’s strongest and most consistent growth markets.”

Tyler added: “Economic growth and connectivity go hand in hand. Indeed, connectivity creates jobs and supports growth. So it is for good reason that the long-term sustainability of aviation will be high on the agenda when governments meet in Montreal at the end of this month for the 38th Assembly of the International Civil Aviation Organisation (ICAO).

“The aviation industry is committed to addressing its climate change impact including the challenging target of carbon-neutral growth from 2020.

“Governments set the same goal when they last met. So this assembly is a golden opportunity to reach a global consensus by governments on how to achieve this goal efficiently.”

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